Gold prices reversed course, dropping 2 percent in late trading back below the psychological $1,900 level, after Russia's invasion of Ukraine triggered sharp swings in precious metals markets and investors reacted to hopes that geopolitical tensions in Ukraine could ease.
Quoting Antara, Saturday (26/2/2022), the most active gold contract price for April delivery on the Comex division of the New York Exchange, fell US$38.7, or 2.01 percent, to close at US$1,887.60 per ounce.
On Thursday (24/2/2022), benchmark gold futures had jumped to the highest level in January 2021 at US$1,976.20 per ounce.
In addition to today's decline, the Comex front-month gold price also shed 0.6 percent on the week for its first weekly decline since January 21, when it settled at US$1,784.90 per ounce.
Russia said it was willing to negotiate. The news helped ease gold's demand for shelter.
"We think the price drop is premature, there is a risk of further escalation in the conflict and it could be only a temporary correction," said Commerzbank analyst Daniel Briesemann.
Some market participants believe the sanctions imposed by the West on Russia are not harsh enough, Briesemann added.
The price of the safe-haven metal rose more than 3.0 percent to as low as US $ 1,973.96 in the last session after Russia attacked Ukraine. They retreated more than 90 US dollars from Thursday's highs (24/2/2022).
"The dramatic rise followed by a dramatic decline was very technically motivated," said David Meger, director of metals trading at High Ridge Futures.
A rebound in global stock markets also weighed on the safe-haven metal, even as analysts expect market volatility to remain high.
"The risk premium and safe-haven demand will continue to support gold, but gains were limited by a possible rate hike by the US Federal Reserve this March," said Xaio Fu, chief commodity market strategist at Bank of China International.
The US Commerce Department reported that US consumer spending, which accounts for more than two-thirds of US economic activity, jumped 2.1 percent in January after falling 0.8 percent in December, beating market expectations.
The US Commerce Department also reported that US durable goods orders jumped 1.6 percent in January, much more than analysts had expected.
The price of another precious metal, silver for May delivery fell 69.3 cents, or 2.8 percent, to close at US $ 24.017 per ounce. Platinum for April delivery fell 12 dollars, or 1.13 percent, to close at 1,050.10 dollars an ounce.
